A magician named Corky (Anthony Hopkins) does poorly on stage. When he reports back to his teacher, Merlin (E.J. André), he is told he needs some kind of hook or gimmick to connect with the audience. When he adds ventriloquism to his act, using a dummy named Fats, his career takes off.
Over time, he plays bigger theaters and appears on talk shows, and then his manager Ben Greene (Burgess Meredith) brings him an offer for the big time, on television. The only problem: a medical examination is required. Corky absolutely refuses, stating it's a matter of principle... but as the conversation continues, he becomes almost hysterical at the prospect.
He packs up and returns to his old hometown to rethink his career. He gets a cabin at a lakeside resort run by his high school crush Peg (Ann-Margret). It's obvious she returns his feelings, but she is married to an overbearing but dedicated husband Duke (Ed Lauter) who is a bit jealous and possessive.
As Corky is trying to rekindle their relationship, his private conversations with his alter ego dummy, known as "Fats," take on a sinister and self-abusive quality. Fats goes from an amusing character played through his mannequin, into a schizoid-like personality split, in which Corky no longer can discern that Fats is a feature of his subconscious self.
His manager Ben comes out to the resort to find Corky. He sees that Corky is losing it, and challenges Corky to, "...make Fats shut up for five minutes..." which is played out in real time. It's frightening, because Corky is clearly insane, and he admits this, twitching and shifting uncomfortably in his seat, when he says, "I'm not going to make it..."
Fats determines that Ben has to die in order to preserve their secret, so Corky kills him and drops the body in the lake. Peg's husband returns, and after the suspicious Duke finds Ben's car and body, he must be killed as well. At the end of the movie, Peg agrees to run away with Corky, but wants to wait until Duke returns to tell him face to face rather than just leaving. Corky, who has pledged to pack up Fats for good when he leaves with Peg, becomes desperate since he knows Duke is never coming back.
Fats tells Corky he has to kill Peg as well, and a tormented Corky goes to the main house to do his bidding. When he returns to the cabin, Fats starts to feel unwell, and Corky reveals that he has stabbed himself rather than hurt the only person he loves. Corky crawls over to Fats, and they lie down together to die. Peg walks down to the cabin, calling to Corky that she has changed her mind and is ready to leave, but there is no answer.